Pull and Push systems. ERP software and Kanban

Link your ERP to your pull

How can pull and push work together?

by / Tuesday, 09 December 2014 / Published in ERP, Latest posts
Pull and Push systems. ERP software and Kanban, Sackville, Moncton, Halifax, Montreal, Boston, New York

Pull And Push Works When Done Right!

If you have any lean manufacturing experience; or taken any form of lean training, you probably know that push and pull systems are two completely opposite manufacturing philosophies. If you talk to a traditional lean consultant, they will tell you that using a push system creates inventory and overproduction waste, and that you should convert your production to a pull system. If you talk to an ERP consultant, they will tell you that material and resource planning are important tools that every manufacturing company should use to make sure that they properly balance supply and demand to meet their schedule.

I agree with both of them. While I am a firm believer that the production floor should use a pull system to execute the work, I also believe that this work should be planned by a pull system.

How should I use my material and resource planning software?

It’s simple, all your production parts should have a bill of material and a bill of operations (or routing as it’s sometimes called). Having these will ensure that you have a forecast of your material and resource requirements for the future. ERP software’s are also very good at telling you how well you did in the past, in manufacturing the best predictor of future performance is past performance.

Once all your parts have a bill of operations, then you are able to determine your load by work centre, one of my favorite tools to view load are Rough Cut Capacity Planning charts. I find that I don’t typically like the RCCP charts that come with any ERP software, so I tend to create custom ODBC linked reports for these. This simple report shows your weekly work load by work centre and it’s capacity. In the example below, the RCCP chart also shows how much of the load is workable, the previous few weeks performance and the amount of rework conducted. I like including past indicators like these in RCCP charts since it is crucial to understand the difference between planned and demonstrated capacity to improve performance to schedule. In the case of rework hours, I find it a useful indicator to prioritize improvements.

RCCP Chart Pic

 

It’s by using these tools that your master scheduler should be able to balance the workload on your production floor and determine weekly targets by work center. It’s typically at this point that companies make their biggest mistake, they try to schedule daily production by work center to meet the schedule and push the work to the floor. The last step of the push process is actually very simple, all you need to do is prioritize the work for production by pipeline and let your production pull the work.

What is a pull system?

Although I will assume that most of the readers of this blog know what a pull system is, I will still give a quick explanation.

The supermarket concept of a pull system

The best way to understand a pull system is to look at the way product flows through a supermarket. In this example below a customer purchases 2 items, which creates an empty space on the display shelf, this gives authorization for these same 2 items to be pulled from the warehouse to fill the empty spaces, this in turn creates a pull through the rest of the line. The basic principal is that there is always a maximum amount of inventory between each step of the process and that you can only produce if your internal customer gives you authorization. If you used a push system in this example, the schedule may tell you to stock the shelves with an item when there is no empty space on your self, what do you do to meet your schedule? Put these items on the floor?

Supermarket kanban / pull system example

Explaining the principal of Kanban / pull systems with a supermarket

 

Production example of a pull system line

When setting up a pull on your production floor, you simply need to determine the maximum amount of inventory you will allow between each step. Once you have determine these limits, you need to determine what type of Kanban signal you will be using, many use Kanban cards, but my personal favorite is Kanban squares (As illustrated below). I should note that you need to be very careful that you don’t start with too much inventory between each step, and that you should continuously reduce this inventory over time. However, I won’t go into more detail on this point as it’s probably the topic for another blog.

Kanban Production

In the example above the following Kanban rules are in place:

  1. Work Center A has a Kanban limit of 3 between him and his internal customer work center B, which means that he can only produce if one of the Kanban squares is empty.
  2. Work Center A’s in rack also has a Kanban limit of 3, which means that the inventory room can only kit and deliver material when one of the Kanban squares is empty.
  3. Work Center B has a Kanban limit of 3 between him and shipping, which means that he can only produce when one of the Kanban squares is empty.

Once you understand the pull system, you will need to establish how many production pipelines you have so that you can setup links for all of them.

What is a production pipeline?

A production pipeline is the value stream for either all the different products you manufacture, or all the different types of products you manufacture. For those of you who have use value stream mapping, this exercise should be fairly simple. If your company has 4 or 5 different production lines; then it’s pretty simple, you establish a Kanban limit between your master scheduler and your inventory room, then between your inventory room and the first step of the process. In many ways, I believe that these first 2 kanban links are the most important in the flow as they are critical to your material and resource planning process.

Many job shops believe that pull systems are impossible in their environment, because they don’t mass produce any product. In that case, they would need to setup their pipelines by process. For example, a job shop that has machining, sheet metal fabrication and welding should setup pipelines for each one of these processes. In this example, if you have parts that are machines and then welded together, you would simply setup inter-pipeline links (ie between machining and welding).

 Next Steps

Although setting up this process will take some time, is will simplify your material and resource planning processes and reduce your inventory and your WIP which will shorten your lead time. Your production supervisors job will then be to move resources as per the Kanban rules and too meet your production target, you should remember that although you’ve established targets for each of your work centers, that it’s the target of your last step that is the most important. Pull systems are also an important part of making your problems more visible and is an important part of the lean journey.

Once you have completed the implementation, you should see if you can extent your kanban link to your external suppliers and customers, this will be difficult if you are a job shop but may still be possible for some of your material / products. You will also want to focus of reducing the amount of inventory / WIP between each of your steps and see if you can create continuous flow, but that’s a topic for another blog.

It is also critical that as you implement your production pull system, that you design it using 5S principles, so that the level of Kanban for every work centre is visible at a glance.  Although supervisor need to monitor the pull and move employees, your goal should be to have employees move themselves is much easier to accomplish when your pull is visual. I noted earlier that my favourite type of Kanban are the Kanban squares; and that’s because they are the most visible form of signal you can create, and they are pretty much fool proof. However, when your internal supplier or your internal customer are too far to create Kanban squares, you need another type of signal. The most common of these, is the Kanban card, which is very inexpensive way to implement and manage a pull system. However, when using Kanban cards, I have found that it was difficult to see how much authorization a work centre has unless I use Kanban boards. Kanban boards are basically shadow boards for all of your Kanban’s that shows how much authorization you have from your internal customer. You don’t need a Kanban board from your supplier since there should simply be a Kanban card with every work order in your in rack. Implementing Kanban boards will let you visually see at a glance how much authorization each of your work enters have and allow you to move resources to resolve bottlenecks.

For those of you who are interested in lean manufacturing training to better understand how to implement pull systems, take a look at the lean manufacturing courses I offer. Also, if your company is interested in linking their pull to their push system, contact me and I will be glad to help.

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